“Tesla without Elon Musk is worth some substantial fraction less,” Coffee said. “The penalty really falls on Tesla shareholders. Who is going to run that company?”

Musk defended himself, calling the SEC lawsuit an “unjustified action” that leaves him “deeply saddened and disappointed.” The CEO said he has always taken action “in the best interests of truth, transparency and investors.”

How serious are the SEC’s accusations?

Very.

The agency chose to charge Musk under Rule 10b-5 of the Exchange Act. That’s what the SEC uses to go after insider traders and market manipulators.